These difficult, over bearing, unreasonable people keep everyone in control and walking on egg shells 24/7 with threat of their explosive kick-off when anyone puts a reasonable question to them.
The fact that she has burnt so many bridges tells you all you need to know - you should point out to your DH and to her that she is the common denominator in all of this....
Men like your DH have been conditioned to enable, reward and therefore encourage the continued bad behaviour by their 'not rocking the boat approach' - most other people in her life have walked away completely - if this is not the route you want to take - she needs to see your anger/assertiveness, where your displeasure is expressed, boundaries are crystal clear and most importantly consequences laid out - and you need to be ready and prepared for her bluster and anger back - probably followed by sulking.....but that will not hurt as much as constantly living you life on pins around her 24/7 trying to anticipate what she will do next, resentment growing and then the shock of another stupid out of order incident.
Everyone needs to man up to these people. But she will be eternally difficult and wanting to control - so keep her at arms length, out of your business, don't give her info (be vague) or in roads (no way to childcare) that she will exploit.
It is hard to be assertive with these toxic people - but have stock phrases to hand that you have practised calmly out loud in the mirror which applies to every situation so that you are not caught off guard...
What do you mean by that?
Is that what you think?
Why would you do/say that?
No, that doesn't work for me.
No, that is not how we do things.
We will think about it and come back to you.
No we have (or will) made our decision.
You have over stepped the mark - this is our home/child and we will decide what to do.
Check with us first before you do/buy anything regarding our child.
And if you were not able to deal with an incident at the time - go back to it face to face - simple and straight forward....when she kicks off be ready to say "We need to leave now as we will not engage or be exposed to this behaviour. Perhaps call us when you have calmed down and though things through.
You need to treat these people as toddlers as they are at about the same emotional development stage:
call them on every little thing - calmly & consistently - state the boundary and consequence
demand mutual respect
enforce the consequence if the boundary is over stepped
don't engage with the tantrum
cast them out on the naughty step (reducing contact) frequently!!!